Welcoming Remarks at Anti-Money Laundering Webinar 2021
16 Sep 2021
Welcoming Remarks at Anti-Money Laundering Webinar 2021
Carmen Chu, Executive Director (Enforcement and AML), Hong Kong Monetary Authority
- It is my great pleasure to welcome you all to our AML Seminar, an event we have in the past conducted physically in the Central Library or in the HKMA premises. It is perhaps fitting that we are for the first time delivering the programme in a webinar format because we will focus on: “collaboration”, “technology” and “data”, three key themes that the HKMA has reinforced in recent years, and which we believe can help shape a more effective response to detect, deter and disrupt new and emerging ML/TF threats collectively.
- Making reference to accurate, timely and objective information for risk assessment is a prerequisite for an effective risk-based approach. The HKMA has recently updated the sectoral risk assessment in the light of emerging threats, such as online scams and new payment methods, and considered that the risk remains high for the banking sector being abused for financial crime activities. We are currently gathering further inputs and comments from the industry, and when the collective understanding of sectoral risks is clear, institutional ML/TF risk assessments, including customer and product risk assessments, can be updated accordingly by individual firms. An effective RBA helps banks, including virtual banks, to stay resilient and focus resources on control measures commensurate with assessed risks.
- The concrete steps that banks and SVF licensees have been taking, as key frontline gatekeepers of our financial system, play an important part in how results in the eco-system are achieved. Following the HKMA’s guidance, and as part of their risk-based approach, more institutions are now leveraging richer data streams like digital footprint information to drive the gains from analytics and technology-enabled information sharing partnership to deliver more responsive and actionable suspicious activity reporting.
- Domestic and international financial crime typologies and cases are being shared through the Fraud and Money Laundering Intelligence Taskforce (FMLIT) and the Anti-Deception Coordination Centre (ADCC), as well as reporting suspicion to and feedback from the Joint Financial Intelligence Unit (JFIU).
- Important though typologies may be, data across the global AML system suggests that the sharing of case specific information through collaborative platforms, that is, an intelligence-led approach, is one of the key differentials to achieving better results. To name a few positive outcomes so far, through FMLIT, banks have identified and reported over 12,000 accounts previously unknown to LEAs; banks’ round-the-clock assistance to ADCC which intercepted HK$3 billion in 2020; and in line with international experience, significant share (85%) of over 57,000 STRs last year were made by the banking sector to the JFIU for law enforcement action.
- We also understand the importance of clear communication of our expectations regarding the mandate which Boards and senior management of banks need to provide to their financial crime compliance teams on responsible innovation. In particular, we continue to encourage and facilitate AML and Financial Crime Regtech adoption initiatives that were launched in the AML/CFT Regtech Forum in 2019.
- We also make sure that actions to dismantle perceived or real barriers to innovation form a core part of our risk-based AML supervisory engagement with banks and SVF licensees, and also contribute to the HKMA’s Fintech 2025 Strategy. When it comes to technology and innovation, any actions cannot be prescribed; rather, the process should be agile and iterative, with sharing of real-life examples through our publications and circulars, as well as supervisory engagement through Fintech Supervisory Sandbox and Chatroom on use case proposals. And later this year, we will launch the AML and Financial Crime Regtech Labs to facilitate the necessary testing environment for banks before adoption.
- Today’s webinar will be divided into two parts: the first part is presented by public sector authorities in the AML eco-system, in which the HKMA will provide an update of the sectoral risk assessment and feedback from our supervisory work; the newly formed Financial Intelligence and Investigation Bureau will introduce its work priorities including its exciting project on the Financial Data Analytic Platform as well as providing feedback on STRs; and the Commercial Crime Bureau will underscore the importance of the public-private partnership approach through both FMLIT and ADCC platforms to collectively achieve a more effective response to online fraud and mule account networks. May I extend our gratitude to colleagues from the Hong Kong Police Force for joining us today to share their important perspective.
- We also understand that events like this, where industry practitioners share their experience, is an important way of encouraging learning and collaboration. I would like to particularly thank the subject matter experts from Bank of China (Hong Kong), Citibank (Hong Kong), and one of our virtual banks – Mox for providing rich industry perspectives, in the second half of the webinar.
- The last point that I would like to make is that if we want these success stories to become the industry norm, we need more input from more banks and closer cooperation in public-private partnership in the AML ecosystem. So, at the risk of repeating myself, please do not hesitate to raise ideas and explore together when you feel any changes might offer genuine benefits.
- I hope you will enjoy the programme. Thank you.